Thursday, July 2, 2009

Morning Update/ Market Thread 7/2

Good Morning,

Here's the reaction to this morning's worse than expected employment (or lack therof) report:

The headline number jumped from 322,000 in May to 467,000 in June, a number much worse than expected by the "experts." The unemployment rate jumped to 9.5% on the headline number. I’ll cover this report in more detail in a separate post.

Also released today was the weekly unemployment data. It came in well over 600k once again, this time at 614,000 with continuing claims falling slightly to 6.702 million. Again, there are now people dropping off the rolls on the backside.

Here’s Econoday’s report on the Weekly Unemployment report:
June's payroll data are a disappointment but not jobless claims data which do show weekly and monthly improvement. Initial claims totaled 614,000 in the June 27 week for a 615,250 four-week average that's down nearly 17,000 from May's average. Continuing claims for the June 20 week totaled 6.702 million for a four-week average of 6.752 million which is just about unchanged from May. Stocks were retreating this morning as were commodities in reaction to the monthly employment data. But next week focus will return to this report and whether improvement in initial claims is extending into this month.

Factory orders are released at 10 Eastern and there is the usual and unbelievably massive Treasury auctions scheduled for today as well. Of course the markets are closed tomorrow in advance of the 4th which is Saturday.

Yesterday’s rise was on lower volume and I’m sure that the entire week will be very low volume. If prices remain depressed today, it’s pretty bearish that this week will not be real positive as seasonality would generally make it so.

903 is an important level and it is being tested right now. A weekly close below that level is bearish and I note that the 912 pivot was already taken out and will now be overhead resistance again. The next lower pivot point is all the way down at 848.

As the employment data points out, people were getting their green shoot expectations too high. This will be no V shaped recession, heck, it’s not even going to be an L shaped recession. It’s going to be a SPLAT recession!

Doors – When the Music’s Over: